I’m thinking about half my readers know what a “wash out sheet” is and the other half probably don’t. For those that don’t, in the early years of the retail auto business, dealers used a “wash out sheet” to determine how much money they really made on the sale of a vehicle.
Here’s the way it worked. A new car comes into your inventory. You don’t know how much money you made until any and all trades are sold and thus “washed out.”
Follow the sequence. A new car creates a trade; you sell the trade. You trade in another and finally sell the last one with no trade. You then you calculate the total gross generated by the sale of that one new car plus all the trades.
It this case it took 3 transactions to determine how much total money was made. You would do the same thing if you purchased a used vehicle. If there were no trades or maybe one, the wash out occurs much sooner.
Some dealerships didn’t pay the sales person his/her full commission until the deal “washed out.” Do you think the sales person had a vested interest in seeing that the trades got sold? You betcha!
As I see the industry struggling with gross profit I have to wonder if maybe we’d be better off to go back to the old way of thinking. With technology being as sophisticated as it is today, why not calculate the total gross generated by one new car sale or one purchased used car sale?
We can all agree that to improve front gross profit, we need to work harder to sell the value of the vehicle and our organization. Most would also agree the key to long term success is going to be to improve volume.
If you’re going to improve volume it might be wise to look at the big picture by thinking about how much total “wash out gross” we are generating rather than just the sale of one unit.
It’s kind of like suits and ties. Keep them around long enough and they will come back in style. That’s all I’m gonna say, Tommy Gibbs